Ramona Real Estate Association: Understanding closing costs in an escrow state

California is an escrow state when purchasing property. While buying property is an exciting journey, it’s important to understand the costs involved. Here’s a guide to help you understand what these costs are and how they impact your property purchase.

What Are Closing Costs?

Closing costs are the fees and expenses you pay when completing your property purchase. They are in addition to the down payment and can range from 2% to 5% of the property’s purchase price. 

Specifics of Closing Costs in California  

In California, closing costs include multiple layers:

– Escrow Fees: Paid to an escrow company, which manages the closing process, ensuring all documents are signed and funds are transferred securely. Sellers typically select escrow.

– Title Insurance: Protects you and the lender against future claims on the property. The cost depends on the sale price. Buyers may choose title.

– Agent Compensation: Your agent negotiates their compensation you. Often because of the closing costs, Buyers may not have funds to cover their agent’s compensation and may ask the Seller to help with that cost.

– Loan Origination Fees: Charged by your lender for processing your loan application.

– Appraisal Fees: Required to assess the home’s value.

– Inspection Fees: Optional but highly encouraged to assess the home’s condition. This is a fee paid at time of service and not through escrow.

– Recording Fees: Paid to the county for recording the new deed.

– Transfer Taxes: Ramona (San Diego County) currently does not impose a transfer tax on property sales.

How Closing Costs Impact Your Property Purchase  

In Ramona, the local market and specific property details influence your closing costs. Since Ramona is in San Diego County, the overall costs might be slightly lower than in other parts of California. However, it’s smart to budget for these expenses early on to avoid surprises.

Tips for Homebuyers in Ramona  

– Get a Good Estimate: Your escrow officer or real estate agent can provide a detailed estimate based on your chosen property. 

– Negotiate Costs: Sometimes, sellers agree to cover part of the closing costs usually in the form of credits to you at closing.

– Review the Closing Disclosure: This document details all your closing costs well before the closing day, giving you time to review and ask questions.  

Closing costs are a part of buying property. They cover essential services and fees that ensure your property transfer is legal and complete. Understanding these costs early allows you to budget properly and approach your home purchase with confidence.

If you’re considering buying or selling in Ramona, working closely with your local real estate professional can help make this process smooth and transparent. Find your agent at RREA.org. 

Karen Domnitz is vice president of the Ramona Real Estate Association and a Realtor with CENTURY 21 Affiliated, 00897504